Commentary

A1.121 Income tax is a tax on income

Administration and compliance

A1.121 Income tax is a tax on income

The nature of income

A1.121 Income tax is a tax on income

The Income Tax Acts1 impose a tax on income. Nowhere in the Acts is there a single comprehensive definition of what is income. The method of the Acts, which is now embodied in ITEPA 2003, ITTOIA 2005 and ITA 2007, is to classify income by reference to the source from which it is derived, and then to measure and tax each class of income according to sets of rules peculiar to those sources.

Income is in the first place classified into main divisions (until 2004–05 'Schedules', some of

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